Supreme Court to hear Kingfisher plea on tax demand Jan 21

New Delhi, Jan 16 (IANS) The Supreme Court will Jan 21 hear a petition by Kingfisher Airlines challenging a Karnataka High Court's order to deposit 50 percent of the tax demanded by the income tax department and provide bank guarantee for the balance amount.

The bench of Chief Justice Altamas Kabir, Justice J. Chelameswar and Justice Vikramajit Sen directed the listing of the matter Monday after senior counsel Mukul Rohtagi mentioned it before the court.

While challenging the Dec 5, 2012, high court order, petitioner Kingfisher Airlines, as an interim relief, has sought to restrain the income tax department from taking any coercive step against it directly or indirectly.

The total amount the department has asked the airlines to pay towards its alleged outstanding liabilities for assessment year 2010-11 to 2012-13 is Rs.264,55,78,484 (Rs.2.64 billion).

This is the amount the department mentioned in its May 17 and 18, 2012, notices to various banks for the payment allegedly due by Kingfisher, the petition said.

It said "irreparable injury and harm" would be caused to the airlines if it was asked to deposit the alleged outstanding liability.

It also said the airlines was already facing "severe financial crisis on account of reasons beyond its control".

Reasons, the petition said, included global spurt in crude oil prices, heavy taxes on aviation turbine fuel, depreciation of rupee against dollar and severe financial crunch in the airline.

The petition said Kingfisher was operating 350 flights a day with more than 60 aircrafts, but due to aggravation of financial crisis and consequent temporary suspension of its licence, its operations had been suspended.

The high court order, the petition said, would cause "grave hardship" to the airline and the "public at large in as much the petitioner will not be able to revive its business, for which it is making a serious effort".

The petition said "public money has been invested in the business of the petitioner and if as a result of impugned order, the petitioner is not able to revive its business, grave hardship will be caused to the public at large".

The income tax department had in three orders Dec 30, 2011, raised the said tax demand contending that the TDS (tax deducted at source) Kingfisher had deducted on the various payments made to different parties during the said period were not remitted to government accounts.

The orders raising the tax demand were upheld by commissioner of income tax (appeals) by its Feb 29, 2012, decision.

However, the Income Tax Appellate Tribunal by its May 25, 2012, order set aside the order asking the petitioner to pay the tax it had collected by way of TDS.

The high court by its Dec 5 order had asked Kingfisher to deposit the 50 percent of the tax amount and furnish the bank guarantee for the same.